Klarna sets up UK holding company to move to IPO

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“Buy now, pay later” company Klarna aims to return to profitability by the summer of 2023.

Jakub Porzycki NurDealbh | Getty Images

Buy now, pay later The Klarna company has set up a UK holding company that will sit at the top of its corporate structure, in a symbolic move that paves the way for an eventual listing.

A spokesperson from Klarna confirmed to CNBC that the Stockholm-based business, which allows customers to postpone payments over a period of installments, has begun restructuring a legal entity to establish the holding company.

Arrangements for the new company have been approved by some of Klarna’s biggest shareholders, including Sequoia and Heartland, the spokesman said.

A Klarna spokesman said the move was the start of a formal listing, but said it was still “very early days” and the company had no immediate plans to go public.

Klarna has also not decided where it will choose to list, the spokesman said, and the establishment of its new legal entity in the UK does not mean that the company will go public there.

It does, however, give Klarna flexibility as to which stock exchange it decides on.

The restructuring “is an administrative change that has been in the works for over 12 months and will not affect anyone’s roles, or Klarna’s Swedish operations,” a Klarna spokesperson told CNBC via email.

“Klarna Holding will continue as the regulated financial holding company under the direct supervision of the SFSA [Swedish Financial Services Authority] and we will continue to hold a Swedish banking licence. “

Klarna is a major player in the European payments industry, worth $6.7 billion.

Like PayPal and Stripe, will allow merchants to add payment capability to their online stores. It differs from these competitors in its flexible payment plans, called buy now, pay later.

At the height of the Covid-led boom in e-commerce, Klarna was worth a whopping $46 billion, on board Bank Soft as an investor. Its valuation was reduced by 85%, to $6.7 billion after the pandemic-fueled boom in technology valuations subsided.

Klarna, which was included in the CNBC and Statista list of the top 200 fintech companies, has raised more than $4 billion in funding to date from investors including Sequoia, Silver Lake and China’s Ant Group.

The UK initially planned to implement strict new rules on buy now, pay later business, with plans to require affordability checks and clearer communication in the advertising of these services .

Britain is reportedly considering scrapping those plans after several of the biggest players said, in talks with the government, that they might have to leave the UK if they are subject to “heavy” regulation.

Leaders at Klarna and Blockwhose buy-now, pay-later service Clearpay has blocked some of the UK’s regulatory plans, including a move that would have exempted the e-commerce giant Amazon from being subject to the rules.

Klarna has since been pushing hard towards profitability, reporting its first month of profit earlier this year for the first time since 2020.

Klarna has been investing heavily in artificial intelligence products, recently launching an AI image recognition tool that recognizes specific products, such as a jacket or a pair of headphones.

Separately this weekend, Klarna also reached an agreement with workers in Sweden to end plans to go on strike.

Watch: Klarna’s shopping loss is now 30% below industry average, says CEO Sebastian Siemiatkowski

Klarna's shopping loss is now 30% below industry average, says CEO Sebastian Siemiatkowski
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